Case Law Details

Case Name : ACIT Vs. M/s Sikka Papers Mills Ltd. (ITAT Delhi)
Appeal Number : I.T.A. No. 5617/Del/2010
Date of Judgement/Order : 31/01/2012
Related Assessment Year : 2007- 08
Courts : All ITAT (5189) ITAT Delhi (1169)

ACIT Vs. M/s Sikka Papers Mills Ltd. (ITAT Delhi)- In this case the identity of the share holders has not been established in order to ascertain the genuineness of the transactions, Assessing Officer issued commission u/s. 131(d) to the departmental officers in Lucknow and Agra as well as and asked for information 133(6) of the Act directly from the share applicants. The letters issued by registered post to the aforesaid share applicant companies u/s. 133(6) remained unserved while the departmental officers found that no such companies existed at the given address.

In these circumstances, it cannot be said that the identity of the share applicant have been established. The other documents on the basis of which the Ld. Commissioner of Income Tax (Appeals) has granted the relief have not been the subject matter of scrutiny and examination by the Assessing Officer. It is also not the case that Ld. Commissioner of Income Tax (Appeals) has himself verified these documents. We further find that the share in this case have been issued at premium of  Rs.  40 per share, this aspect has not been examined by the authorities below. In these circumstances, in our considered opinion, interest of justice will served if the matter is remitted to the file of the Assessing Officer to consider the issue afresh. Hence, the matter stands remitted to the file of the Assessing Officer to consider the issue afresh.

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH “G”, NEW DELHI

I.T.A. No. 5617/Del/2010 – A.Y: 2007- 08

ACIT, Circle-I, Muzaffarnagar

Vs.

M/s Sikka Papers Mills Ltd. 

ORDER

PER SHAMIM YAHYA: AM

 

This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals) dated 16.9.2010 pertaining to assessment year 2007- 08.

2. The grounds raised in the appeal read as under:-

“i) On the facts in the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in law by deleting the addition of Rs. 70,00,000/- made by the Assessing Officer on account of share application money without appreciating full fact of the case. Further in this case when identity of the share applicants has been amply disproved as the Departmental Officers at Agra and Lucknow had intimated that no such share applicants ever existed at the given addresses, the order of the Hon’ble Supreme courts as reported in C.I.T. vs. Lovely Exports P Ltd., Taxman Vo. 172 page 44 (208) (Supra) as quoted by the Ld. Commissioner of Income Tax (Appeals) for allowing this appeal is not applicable in this case.

ii) The order of the Ld. Commissioner of Income Tax (Appeals) be set aside and that of Assessing Officer be restored.”

3. In this case the facts of the case are that the assessee is a limited company engaged in the business of manufacturing and sale of paper products. Return declaring income of Rs. 84,61,628/- was e-filed on 31.10.2007. During the course of assessment proceedings it was noticed by the Assessing Officer that there was an increase in share capital at Rs. 76,98,000/-. It was contended by the appellant that during the year under consideration it had received share application money from six different investors. Out of this Rs. 50 lac was received from M/s Maya Industries Ltd., Lucknow and ` 20 lac from M/s Ishom Photo Color Lab (P) Ltd. Agra. Thus in order to ascertain the genuineness of transactions the Assessing Officer issued commission u/s 131(d) to the departmental officers in Lucknow and Agra as well as asked information 133(6) of the Act directly from such share applicants. The letters issued by registered post to the aforesaid share applicant companies u/s. 133(6) remained unserved while the departmental officers in Lucknow and Agra informed that no such companies existed at the given address. Thus the Assessing Officer required the assessee to produce M.D./C.E.O. to these companies for examination. However, the assessee tried to justify the genuineness of transaction of share application money but no such person responsible for investment was produced. The Assessing Officer made addition of Rs. 70,000,000/- on appellant’s income u/s. 68 of the IT Act.

4. Upon assessee’s Ld. Commissioner of Income Tax (Appeals) observed that during assessment proceedings itself, the assessee had furnished adequate details to substantiate increase in share capital. He observed that it is not disputed that name, address, amount of share allotment as well as copies of share applicant forms signed by these persons, their income tax returns, etc. have been placed before the Assessing Officer. Ld. Commissioner of Income Tax (Appeals) further observed that such allottees could be cross tallied from the Form No. 2 with ROC as well. In these circumstances, Ld. Commissioner of Income Tax (Appeals) proceeded to hold that assessee has sufficient evidences i.e. confirmation, IT Returns, bank statements etc. and hence onus has been shifted from assessee onto Assessing Officer, but Assessing Officer has not discharged his onus to show any discrepancy /falsity in such evidences. Accordingly, Ld. Commissioner of Income Tax (Appeals) decide the issue in favour of the assessee.

5. Against the above order the Revenue is in appeal before us.

6. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that in this case the identity of the share holders has not been established in order to ascertain the genuineness of the transactions, Assessing Officer issued commission u/s. 131(d) to the departmental officers in Lucknow and Agra as well as and asked for information 133(6) of the Act directly from the share applicants. The letters issued by registered post to the aforesaid share applicant companies u/s. 133(6) remained unserved while the departmental officers found that no such companies existed at the given address. In these circumstances, it cannot be said that the identity of the share applicant have been established. The other documents on the basis of which the Ld. Commissioner of Income Tax (Appeals) has granted the relief have not been the subject matter of scrutiny and examination by the Assessing Officer. It is also not the case that Ld. Commissioner of Income Tax (Appeals) has himself verified these documents. We further find that the share in this case have been issued at premium of ` 40 per share, this aspect has not been examined by the authorities below. In these circumstances, in our considered opinion, interest of justice will served if the matter is remitted to the file of the Assessing Officer to consider the issue afresh. Hence, the matter stands remitted to the file of the Assessing Officer to consider the issue afresh.

7. In the result, the appeal filed by the Revenue stands allowed for statistical purposes.

Order pronounced in the open court on 31/01/2012.

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